FINTECH VIEWS: What Does WealthTech M&A Really Mean for Financial Advisors?

And why advisors should be wary

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By Reed Colley

Remember Nokia?

Maybe not, but once upon a time Nokia was one of the most innovative mobile phone companies in the world.

Nokia was, in fact, the 2000s version of today’s iPhone; everyone had one. In 2007, Nokia absolutely dominated the mobile phone market, with a nearly 50% market share—and it held that position for more than a decade, consistently releasing innovative products and technologies. That is, before the company’s rapid decline just a few years later.  

So, what’s to blame?

Microsoft’s acquisition of Nokia. 

This story is certainly not unique. Whether due to cultural misalignment, disconnected product vision, or team integration challenges, innovative technology firms fall victim to the lasting impacts of massive mergers and acquisitions all the time. 

But as the same trend seeps into the wealth management space I want to warn financial advisors: we’re entering a new era for wealthtech. The players who used to be the gold standard may not stand atop the podium for long, thanks to the unintended effects of mergers and acquisitions. 

A Tale As Old As Time

When tech-forward firms are acquired, innovation tends to slow down. 

In Nokia’s case, this happened for three reasons:

  • Integration Challenges: Microsoft struggled to integrate Nokia’s staff and operations with their own. Cultural differences and organizational misalignments led to operational inefficiencies that were not so easily addressed.
  • Misaligned Strategic Focus: Microsoft‘s operating system had a much smaller market share than Android and iOS. Nevertheless, Microsoft pushed its phone operating system, limiting Nokia’s freedom to choose a system that let them compete most effectively. 
  • Competitive Disadvantage: Despite Nokia’s previously innovative approach, its product releases under Microsoft did not achieve the same level of success. Consumers lost interest because the Microsoft phone platform wasn’t as enticing as that of its competitors. 

Microsoft eventually left the mobile phone game, thus ending Nokia’s time as a key player in the space. Unfortunately, Nokia isn’t the only example of an innovative product falling victim to a mismatched merger and acquisition. Myspace, Palm, and AOL experienced similar fates.

While failure isn’t written in stone for all innovative tech firms that get acquired, those of us in wealth management watching similar themes unfold would do well to learn from their stories. 

The Rise of Frankentech 

As we can see from the stories above, the acquisition of leading-edge technology is often the first sign of decline. As the acquired firm integrates into its new parent company, things change. 

Goals shift. Bureaucracy emerges. The ability to quickly respond to market demands gets diminished. Product strategy evolves from creating a seamless user experience to one that promotes cross-selling and cost-cutting. The focus shifts off the user, and onto parent company stakeholders. The driving force becomes the bottom line and satisfying investors’ demands—not the user experience. 

This shift fuels the emergence of Frankentech—technology cobbled together from disparate sources, leading to unwieldy, unappealing, and dysfunctional solutions that don’t actually solve anything. 

As Bain’s acquisition of Envestnet thrusts industry M&A into the spotlight, we must evaluate and analyze the wake that massive WealthTech acquisitions could leave behind. I believe the reality is clear: As previous wealthtech giants get scooped up across the industry, they may not be the trusty and durable tech choices they once were. 

Advisors have reached an inflection point. It’s not only necessary to reevaluate technology partners, it’s critical to find solutions that harken back to the more user-centric tech platforms of the past and avoid messily pieced together tech that strangles future growth. 

Acquisition-Proof Tech to Power Your Long-Term Growth

The solution to withstanding the winds of wealthtech M&A is to identify and leverage technology purpose-built to meet your unique needs in an intuitive, streamlined fashion. There are three questions to answer when deciding on the right fit, acquisition-proof technology for your advisory practice. 

    • Who is behind the curtain? Look for solutions that are built by advisors, industry veterans, design thinkers, and disruptors. Companies fueled by a passion to help financial advisors do their jobs most effectively are most likely to keep their eyes on the target: you. 
    • Do they embrace your values? Look for technology providers with values that match your own. Just as you want to offer your clients a one-of-a-kind experience that educates and inspires confidence in their financial future, your tech partners should want to build the road upon which creating that experience is seamless.  
  • Do they make your work enjoyable? The value of using seamless technology that’s enjoyable cannot be overstated. Look for solutions that incorporate customer feedback and continuously improve the relevance and usability of their tool—all in the name of making your life easier. 

When picking your technology stack, tread carefully. Look for future-forward, user-centric platforms prepared to support your growth for the long haul. 


As the CEO and co-founder of Summit, Reed Colley is dedicated to revolutionizing wealth operating systems through innovative technology solutions. He is a seasoned advisor, investor, and director of startup and growth companies, known for his expertise in leveraging technology to enhance advisor-client relationships.